Unit 3: Review of traditional construction models and a comparison of product

development processes with other industries (key-words: delivery, methods,

benefits, traditional construction process, lean thinking)

Aims: The general aim of this unit is to review traditional construction models and
compare these models with other industry practice. Students will be encouraged to
question current models and be innovative in developing lean solution to current
problems

Procurement Process

The procurement process is defined as the process from the completion of
design to the successful commissioning of the assembly of the building. Procurement
is also represented by the contractual and financial arrangements although these are
dependent on the parties involved.


Traditional Construction Procurement

The traditional form of procurement is where the designer does not have direct
link with the specialist and all communication is via the main contractor who in
many cases will not accept design liability. This results in a grey area of
responsibility and liability as information is passed from one to the other. In
general, the designer or the architect is the leader of the project and represents the
client to implement the design process. The architect becomes more of a
surrogate client and takes on the responsibility to make sure the project is
delivered on time and on budget. The traditional method of procurement, the
client appoints independent consultants, on a fee basis, who fully design the
project and prepare tender documents upon which competitive bids, often on lump
sum basis, are obtained from contractors. The successful tenderer enters into
direct contract with the client and carries out the work under the supervision of the
original design consultants.
In the traditional procurement, the professionals are empowered to use best
practice defined by their own professional bodies and education. The basic
workforces in general play an inactive role towards the design and planning
process. The basic workforces here work consistently if there are no interruptions
in the production process. Such an environment generally encourages an
adversarial attitude among the design teams.
In terms of cost benefits, reduction of up to 30% can be achieved. While a
reduction of 40% in delivery, time can be achieved but there is a little change in
the quality of the product.

Innovative Construction Procurement

The innovative construction approach gives both experience and inexperience
client hands-on involvement to determine the cost and quality of the intended
design. The client would need a management with strong leadership and
teamwork qualities in order to produce what is expected. Hence, the client, in
terms of design and construction, has only one organisation to deal with. Such
procurement was introduced to accommodate forever increasing diversity,
complexity and standardisation of building techniques. There is also a growth in
prominence of subcontractor and also the size of projects that demand for tighter
time and cost targets thus requiring a more unified and purposeful management of
the total process.
Since the client acts as the surrogate designer, the client plays a major role in
determining the viability of the design. The designer or architect would become
the intermediary for the inception of the design and would assist the client to
realize the completion of the project. In order to achieve this an interface or a
medium have to be developed so that the client would be able to make precise
decisions on a candidate solution from the available options generated by the
interface. The client would also be involved directly in assessing the business
related benefits of the choice of the method of constructions.
In this procurement method, there is a direct involvement of the manufacturer in
terms of design, costing and logistics. There is also a close relationship between
the manufacturer and the main contractor in terms of delivery and site installation.
This system of procurement is able to serve a greater number of clients in whom
the clients will directly be in contact with competent and multi-discipline
professionals in design, management and marketing. Each professionals has their
own specialty and competent in respective fields of expertise. The management
structure of this form of procurement is organised hierarchically according to the
stages of product development.
The basic workforce in this procurement process play a more pro-active role and
continuously giving positive feedback in terms of the viability of the perceived
design. Such a pro-active role amongst the basic workforce would also encourage
speed of installation to meet a tight programme and minimise disruption. In the
case of the Student Accommodation, Plymouth University, Plymouth, modular
standardised units were installed in less than 10 days with minimal disruption and
no additional scaffolding was required.
Assessment of this process of procurement finds that savings in construction time
with improved quality, leading to reduced site preliminaries and expensive
callbacks. It is also found that this method of procurement reduces financial cost
by earlier return of initial capital, with quicker and higher income from rental, less
cost of temporary accommodation and increased asset value.

Fundamental Aspects of the Innovative Construction Procurement

The decision making process in the innovative construction procurement
differs from the traditional in a way that key decisions need to be made early in
the procurement process to avoid expensive alteration to the design. Decisions
also need to be made on environmental implication and site related benefits in
order to reduce its impact on neighbouring properties and site traffic. The effects
of transportation logistics on cost and sizes and on the inter-relationships of
modules also need to be taken into account in the decision making process.
It is important to note that because this system of procurement rely heavily on
the prefabrication process, therefore the initial space planning, subsequent detailed
design, service integration and co-ordination are critical. The design needs to be
completed prior to the commencement of manufacturing.
The nature of this process of the innovative construction procurement is
flexible according to the needs of the client. Some clients, for instance developers
prefer the complete turnkey package which provides design, manufacture and
erection services. However, in many cases the client will appoint an architect who
is responsible with the overall design and co-ordination of all the specialist
manufacturers. Alternatively, the architect may draft a performance specification
for the works, which is usually done in consultation with one or more modular
manufacturers. This is then used as a basis for tendering, either through a main
contractor or directly to the modular specialists.
It is important to remember that each module manufacturer undertakes the
construction of its modules differently. The manufacturer will lend assistance and
provide appropriate detailed drawings but will not be able to provide
commercially sensitive product technical details. Therefore, it is essential that
lead-in time be considered for prototyping, designing and manufacturing of
bespoke modular units to coincide with other design process. If the configuration
of design is reused from previous projects then designing and prototyping time
will be greatly reduced.
The lead-in time required from ordering to delivery of the modular units can
be as short as 6 to 8 weeks if the modular units have been prototyped previously
on similar projects and the production logistics are well established. As an
example, a hotel project may require eight different modular units, internal, end
bay, rooftop, and left- and right-handed units. However, the floor configuration is
the same throughout the project.
For building, which is considering employing the modular construction
approach, extra time should be allocated for the manufacture of pre-production
prototypes, which would identify potential design and manufacturing problems. It
is suggested by The Steel Construction Institute, that a period of 4 to 6 weeks
should allowed for the prototyping stage. Hence, there would be an adjustment
to the lead-in time of delivery of 10 to 14 weeks. This lead may increase to 18
weeks especially when acquiring lifts and complex plant units. In order to reduce
the lead-in time of delivery the main contractor has to create an effective
partnership with the suppliers. Such a partnership has been proven successful on
numerous projects for example in the case of Sainsbury, which acted as a client
established a partnership with Construction Management Partners Schal to
develop Sainsburys new Ecostore. Schal approached the development process by
proposing several options to the client. Schal explored possibilities in developing
new structural system, new floor system and new interior. Task forces were set up
to tackle specific issues for example developing a new and economical floor
system. Sainsburys partnership managed to produce a floor system, which
reduced costs and programme. The floor system was tested and inspected in order
to meet the demands of Sainsburys Ecostore. As a result, Sainsburys Ecostore
looks aesthetically good and with construction time down to 16 weeks and cost
savings equivalent to 32%. Looking at the long-term aspect of this approach,
maintenance cost was reduced and the assurance of future work for all the project
members.

Learning from Existing Delivery Methods.

Integrated Procurement Systems.

Integrated Procurement System is defined as an arrangement where one
contracting organisation takes sole responsibility, normally on a lump sum fixed
price basis, for the bespoke design and construction of a clients project. The
fundamental characteristics of this system are the responsibility for the design and
construction lies with one organisation, reimbursement is generally by means of a
fixed-price lump sum and the project is designed and built specifically to meet the
need of the client.

Advantages

The single point of contact between the client and the contractor that means
the client has the advantage of dealing with one single organisation, which
would be responsible for all aspects of the project.
If the clients requirement were accurately specified certainty of final project
cost could be achieved then the cost would be less when compared with other
procurement.
The use of integrated procurement systems enables design and construction to
be overlapped and should result in improved communications being establish
between contractor and client. These two characteristics enable shorter, overall
project periods to be achieved and project management efficiency to be
improved.

Disadvantages

The clients brief is often ambiguous and does not convey exactly what he is
proposing to the contractor. Hence, difficulties may arise when evaluating
tender submissions.
The absence of a bill of quantity makes the valuation of variations extremely
difficult and restricts the freedom of clients to make changes to the design of
the project during the post contract period.
The clients control over the aspect of design and aesthetics of the building is
less when compared with other method of procurement.

Management-Orientated Procurement Systems

This system is defined as a process whereby an organisation, normally
construction based, is appointed to the professional team during the initial stages
of a project to provide construction management expertise under direction of the
contract administrator (see fig. 1).

The main characteristics of this procurement are:
The contractor is appointed on a professional basis as an equal member of the
design team providing construction expertise.
Reimbursement is based on a lump sum or percentage fee for management
services plus the prime cost of construction.
The actual cost is carried out by works or package contractors who are
employed, co-coordinated and administered by the management contractor.

Advantages

The use of this system of procurement enables the commencement of the
project to be accelerated, which in turn, should enable earlier completion to be
achieved than when using conventional procurement systems.
Early advice can be obtained from the contractor/manager on design,
buildability, programming, materials availability and together with general
construction expertise.
This system has a high degree of flexibility to allow for delays, variations and
rescheduling of work packages.
Since the financial structure of this system is fragmented, the monetary failure
of any works contractor will only have limited effect overall process.
The application of individual work packages to carry out all construction work
ensures that competition can be achieved on up to as much as 90% of the
construction cost of the project and makes it possible to adjust the cost, or
scope, of uncommitted work should the packages already awarded have
exceeded their estimated cost.

Disadvantages

One of the fundamental aims of this procurement system is the elevation of the
contractor to the status of a clients adviser/consultant with the result that the
contractors contractual liabilities are limited, in the same way as other
members of the professional team, to accepting responsibility of negligence in
the performance of his management role.
Although the contractor/manager is responsible for supervising construction
and ensuring that work is built to the standards identified by the design team,
the fact that his obligations are limited to his management capabilities means
the client is liable for the cost of remedying any defects resulting from
substandard performance of any works contractor who is unwilling, or unable,
to rectify his own faults.
The whole issue of maintaining quality control is problematic when using this
procurement system. The client may need to appoint additional site
supervision to avoid difficulties in determining the responsibility for defects
and to ensure that the specified quality is achieved.
The client does not have a firm price tender available before commencing
work although both private and public accountability can be partially satisfied
as the majority of the construction cost can be subject to competitive tender.


















Client via Contract
Design Consultants
Quantity Surveyor
Management Contractor
Construction contractors
Carrying out work packages

Contractual Contractors


Functional Relationship



Fig. 1 : Contractual and Functional Relationship of Management
Contracting.




Summary

Synthesis

By looking at the fundamental aspect of the Innovative Construction
Procurement and critically analysing existing procurement methods, it is possible
to create a systematic framework for the Innovative Construction Method.

A summary of the fundamental aspects of the Innovative Construction
Procurement:
The commencement of the construction of the project needs to be accelerated
in order to evoke speedy completion and ensure optimum capital gain.
Early planning is needed from a management contractor or construction
manager on design, buildability, programming, construction methods,
procurement of plant and materials.
The client wishes to have flexibility available to incorporate design
amendments into the project during the construction period.
The completion period of the project takes priority over the construction cost.
The project would require sophisticated construction and management
techniques in order to ensure success.
The client wishes to be objectively involved in the overall management of the
project.
The client wishes to appoint a single organisation to be responsible for the
design and management of the works and act as a consultant.

One is able to deduce from the summary that the innovative construction
procurement has a similar management organisation as the management
orientated procurement in which both require the contractor to act as the design
and the construction consultant of the project. However, allowing the client to
determine the success of the project. It is also important to stress that such
procurement would need the liabilities of the project to be shared with the other
participating members and not allowing the client to bear the burden of liabilities.
Hence, in this point of view the innovative construction procurement differs from
the management-orientated procurement.

This aspect of effective and pro-active partnership is also common in the
aircraft and automobile industry in which the industry would create partnerships
with sub-contractors to manufacture sub-components. The status of the sub-
contractor is elevated to the same level as the main contractor and the client.
Hence, the profits and the liabilities are shared between the members of the
partnership.

Lean Thinking and Management in the Innovative Construction
Procurement

In other industries, which employ a similar procurement to the Innovative
Construction Procurement for example, the aircraft manufacturer Boeing
Company has adopted, several key lean thinking principles to further enhance the
communication between members of the design team.

Boeing Company has acknowledged the fact that one of the problems that a
project is in trouble is when all parties are reluctant to make key decisions. This is
partly due to a poor communication channels between relevant parties and an
absence of required detailed construction documents and, poor flow of
information. Boeing Company eliminated this problem by fully utilising the
standard e-mail to make multi-billion decisions. Since Boeing Company had a
clear and define aim to deliver its product on time and meeting the required
quality standards, it was able to reduce untimely decisions. Members of the
partnership were able to access and make necessary modification on the current
database through the DCAC/MRM process.

Boeing Company also employed key lean principles in the manufacturing of
the sub-components and the main component. Essentially, there are three
components in Boeing Companys key lean principles takt time production, one
piece flow and pull system.
Takt time production describes the rate of assembly in a factory. Lean does
not mean doing things faster; it means doing things at the right pace. To simply
put it, the customers rate of demand establishes the pace of production. So, rather
than simply maximising the rate of work, Lean sets the pace in the factory,
ensuring that the customers needs are met on time.

One-piece flow system is the opposite of batch production. Instead of building
many products and then holding them in queue for the next step in the process,
products go through each step in the process one at a time, without interruption.
Producing products one at a time continuously improves quality.

Pull Production is the opposite of push. It means products are made only
when the customer has requested or pulled it, and not before. Doing so prevents
building products that are not needed. After achieving a predictable pace of
production, one piece flow, and reliable machinery, Boeing Company can operate
in a pull production environment, allowing the company to provide products when
customer need them.

Having such a principle, Boeing Company was able to eliminate complex
solution, which was producing more waste and was harder to manage. Boeing
Company was able to reduce overproduction and produce the exact amount the
customer needs. Defects, excessive power utilisation and unproductive operations
were also eliminated through this principle. Employing the Key Lean Principle
has reduced lead in time, long setups and unplanned down time of machines,
processes, or people. It also eliminated the movement of materials or information
that does not add value to the product.

As a conclusion, such a principle, if applied to the construction industry,
would bring benefits in terms of:
Promoting modular construction, which offers considerable, benefits to the
developer terms of speed of construction, the ability to pre-plan the
construction phase of the work and reduced callbacks. Modular construction
offer highly cost effective solution for medium rise buildings eliminating the
need for a separate independent structural frame.
Speedy completion leads to reduction in preliminaries, plant usage, site
disruption and earlier rental or sales.
Improvement in quality leads to an increase in rental or sales potential and
client perception.



References

1. Bennett, J. & Jayes. S. (1998), The Seven Pillars of Partnering, Thomas
Telford Publishing, London.
2. Boeing Co., Improving Our Production System,
http://www.boeing.com/commercial/initiatives.
3. Gann, D. (1999), Flexibility and Chouse in Housing, The Policy Press,
University of Bristol.
4. Neale, R., Price, A., Sher, W. (1993), Prefabrication Modules In Construction,
Chartered Institute of Building.
5. Masterman, J.W.E. (1992), An Introduction to Building Procurement, E & FN
Spon, London.
6. Rogan, Lawson, Bates-Brkljac (1999), Value and Benefits Assessment of
Modular Construction, The Steel Construction Institute and The Oxford
Brookes University.